Recent incidents like the horse meat scandal or McDonald’s in China offering expired meat are just the tip of an iceberg of events in the process manufacturing industry that not only jeopardize consumer health but also cause serious long term damage to the company’s brand, investors and other stakeholders.
Many of these incidents could have been prevented with proper systems in place for quality control, traceability and data capture throughout the supply chain.
Recalls are expensive. In fact, they are so expensive that they are deemed as a “significant to catastrophic” financial risk by 81 percent of respondents in a 2011 survey report (PDF) from the Grocery Manufacturers Association, the US-based trade association of the food industry.
The biggest or most costly risk that actually can jeopardize the company as such is the damaged brand reputation. Famous consumer brands like Coca-Cola or McDonald’s takes decades to build, but a product recall can cause serious harm in just a couple of days. Also in less severe cases it is still costly to identify, track and replace products once a recall occurs.
How does an ERP vendor like IFS come into play when it comes to minimizing the risk for product recalls; and, if they happen, minimize the damage done?
The fact is that an ERP system well aligned with the nature of the process manufacturing industry can play a significant role.
This is being made possible by an ERP system broad and deep enough to support the entire business.
- Broad enough to log transactions along the entire value chain, from product development, through purchasing, production, finished goods warehouses, distribution and returns.
- Deep enough to offer industry-specific functionality able to log not only material movements but also analysis results, formulations, corrective and preventive actions, analysis results, batch specific characteristics and more.
With a broad footprint of functionality for quality assurance, quality management and document management the ERP system will make efforts to adhere to quality standards and regulations such as FDA, ISO 14000 and HACCP so much easier.
Even if an enterprise-wide ERP system – one that’s able to capture all traceability information in one common repository that offers one single version of the truth – is successfully implemented, this may not be enough.
In order to enable true traceability at reasonable cost, traceability information and transactions must be captured in an efficient way.
Solutions for data capture using barcoding or RFID has been around for many years. They offer cost-efficient support to log transactions that happen throughout the business. They also prevent reporting delays that are very common in businesses driven by manual reporting, and they are actually a key enabler to traceability and thus efficient handling of recalls.
(If you are interested in more details around quality management and how IFS Applications can support your efforts to comply with standards and legislation, please see my previous blog post, How ERP Helps You Be Compliant with Quality Standards and Legislation.)